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Non Fungible Tokens (NFTs)
Basics * Used in CryptoKitties, Gods Unchained, ENS and Codex Record. * As of 11-2019 OpenSea is the de facto NFT marketplace with collectibles from over 180 unique dApps and even more one-off events (like SFBW attendance tickets). * From this Medium post: "To understand what a non-fungible token is, we must understand what fungibility is: In economics, fungibility is the property of a good or a commodity whose individual units are essentially interchangeable. If a good, asset or token in this case, is fungible, then it can be interchanged or replaced by another identical token. Being non-fungible therefore means that a token is absolutely unique and is distinguishable from any other token. The $USD is fungible in nature. $1 is exchangeable for $1. These individual dollars are essentially indistinguishable from one another. Fungibility is a core characteristic of all fiat currencies. Non-fungible tokens are therefore completely unique expressions of an asset on a blockchain. In reading and learning about the Ethereum platform, you may have heard about Crypto Kitties. Collectibles are one early implementation of non-fungible tokens and the analogy of baseball cards is often used to describe how non-fungible collectables work. Many people are familiar with the idea of limited edition baseball cards. Non-fungible tokens work in the same way and are unique representations of an asset." * From this post by FlatOutCrypto (26-7-2019): "Although not the first, NFTs shot to prominence in late 2017 with the rise of CryptoKitties, an Ethereum based game featuring thousands of digital kittens. Despite the seemingly simple premise it exemplifies many of the reasons why NFTs are exciting: * Uniqueness: Each CryptoKitty is unique, with NFTs able to be imbued with a distinct set of characteristics. In this case, it includes colour, facial expressions and fur * Digital scarcity: NFTs retain the scarcity associated with Bitcoin but amend it from 21 million (the maximum supply of Bitcoin) to as low as one. This scarcity (proved by the blockchain) means we can create both unique and irreplicable digital goods * Interoperable:'' Because they remain blockchain based tokens (ERC-721 tokens as opposed to the more usual ERC-20 tokens on Ethereum) owners can utilise NFTs in different ways e.g. ‘breeding’ two CryptoKitties to create offspring with new distinguishing factors'' * Platform: ''This interoperability provides the potential for third party services to build on top of NFTs. For example, CryptoKitties became the basis for other games such as HyperDragons - by ‘eating’ a kitten, players could increase their dragon’s strength'' * Composability: ''Whereas the ERC-721 standard allows for tokens with unique characteristics, the newer ERC-998 token proposal would see ERC-721 tokens able to hold accessories e.g. ball of string for your kitten.'' This would also lend itself to branding opportunities, as companies could provide unique in-game items tied to their own services (e.g. just as luxury car manufacturers limit physical scarcity, so too could they create a limited number of digital cars). These digital collectibles would also tie into other collectible markets such as trading cards, which remains a large market. For example, Major League Baseball recently announced its intention to create an Ethereum based game to capture a younger and digital first market for whom physical cards may feel slightly outdated. NFTs can also remove the centralized services upon which gamers currently rely. For example, gamers must currently sell their items through either opaque over the counter deals or through fee taking centralized services. NFTs, however, could be transferred freely with selling items becoming as easy as sending a normal transaction. What’s more, these items would become the property of their owner. At present items can be arbitrarily taken away from you; items are leased, not owned. With NFTs, however, the items cannot be taken from you. The whole world can see which accounts owns the NFT and full transaction history. This will give people more security and confidence when buying. NFTs also offer the ability to create new gaming experiences. Items and avatars could be combined. Your avatar could become transferrable – along with all its earned accessories – from game to game. Instead of items being designed to be used within games, we may find situations where developers are designing games around items. Third party services will spring up to service and augment these new possibilities, and this will bring forth new ideas. We already spend increasing amounts of time cultivating our digital profiles. Although games such as CryptoKitties may seem basic, they hint at a future where digital objects increasingly resemble the value of physical ones. NFTs will become another building block in the ‘Internet of Value’, where items that were once consumable and replicable become valuable owing to their scarcity. Bitcoin introduced scarcity to a decentralized digital currency, but NFTs may be the means to introduce the concept to a much wider audience."Category:Jargon/Various